Tuesday, 4 February 2014

Questions (334)

Ann Phelan


334. Deputy Ann Phelan asked the Minister for Social Protection the position regarding the changes to PRSI, in particular employers' PRSI, which has now reverted to 8.5% from 4.25%; if this will have a negative impact on employers who have staff that are either on low pay or work less than 39 hours per week; if this will now add substantial costs to employers in wages; and if she will make a statement on the matter. [5228/14]

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Written answers (Question to Social)

Employer PRSI is payable on earnings at the rate of 10.75% in respect of weekly earnings in excess of €356 and at 8.5% on weekly earnings of €356 or less. As part of the 2011 Jobs Initiative, the Minister for Finance announced the halving of the 8.5% rate of employer PRSI to 4.25%, as a means of helping job creation and improving labour cost competitiveness, particularly in the tourism and other employment-rich areas of the economy. The measure was implemented on a 2½ year time limited basis to apply from 1 July 2011 until 31 December 2013. The 4.25% employer PRSI rate reverted to the original 8.5% rate from 1 January 2014.

The reversion of the employer rate to 8.5% is provided for in legislation; it has already been built into the PRSI income base for 2014 and subsequent years. Retaining the 4.25% rate of employer PRSI in 2014 would reduce the expected PRSI yield to the Social Insurance Fund by €195 million in a full year. It is not possible to verify the impact of this measure in isolation on employers who have staff on low pay or work less than 39 hours per week, as employment is affected by a number of factors including the economic environment. In this context the Forfas report on “Costs of Doing Business in Ireland 2012”, highlights the fact that Irish employer social insurance contributions are low when compared with other OECD countries.